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There’s a new blood sport in consumer marketing. Brand leaders watch with schadenfreude as their peers stumble when dealing with social media. In the past twenty months, Nestle, The Red Cross, and Kenneth Cole have all made costly errors managing social media. The problem goes well beyond bad PR: the question for marketing leaders is how to develop a process to steer large organizations around the perils of interacting with consumers on social platforms.

It’s not particularly helpful that the “rules” are clearly different online. Consumers have less tolerance for unexpected e-mail from favored brands than unwanted catalogs from unknown brands in their physical mailbox. Privacy concerns are heightened. As trust is the prized currency of social media, ethical lapses or oversights can be deadly for brands.

Crisis management is a topic for another day. Ethically speaking, however, here are five things to avoid:

1. Unreported Endorsements: Two years ago, the FTC updated its guidelines on endorsements and testimonials to cover social media . In a nutshell, if you’re giving any form of compensation to a blogger or tweeter, it is considered a compensated endorsement and must be disclosed. This includes free product or in-kind compensations and it covers all social media, not just bloggers. In 2006, Wal-Mart suffered a slew of negative publicity when its PR agency Edelman supported two bloggers road tripping across the U.S. writing positive stories about Wal-Mart through the organization Working Families for Wal-Mart. The blogging was gaining traction until BusinessWeek broke the story that the trip expenses for the blogger were being paid indirectly by Wal-Mart.

2. Improper Anonymity: It may be tempting to have your agencies comment anonymously on online forums to promote products, raise questions about competitors or even just correct bad information. Doing so without revealing the company’s involvement is very risky. Whole Foods CEO John Mackey found this out the hard way in 2007 when he was revealed to have pseudonymously trashed competitor Wild Oats online – before trying to buy them. Even if your anonymous online contributions aren't illegal, they risk ruining the trust of your consumers. Phony online reviews are one of the biggest plagues for honest retailers now and you don’t want to get lumped in with practices like that.

3. Compromising Consumer Privacy: The data available on individual consumers is a resource that companies are understandably trying to mine. Done properly, it’s a win-win. Consumers get better, more relevant offers and brands waste less on poorly targeted advertising. But there’s a line past which using information means violating privacy. DoubleClick, the online advertiser since acquired by Google found this out in 2000 when they attempted to combine offline purchase data from consumers with their online persona. [DISCLOSURE: I worked for DoubleClick as Director of Promotions at the time.] Facebook has stepped on the privacy landminenumerous times by repeatedly changing the types of personal information automatically shared. Even when these breaches are unintentional and not malicious, they scare consumers away.

4. Overly Enthusiastic Employees - Your employees have been engaged in social media as individuals for longer than you have as an organization and some of them may have established reputations and strong bases of fans or followers. They may be inclined to spread word about the great things your brand is doing. If they do so without acknowledging their connection to the company they are violating consumer trust. Beyond that, there’s a real risk of employees inadvertently disclosing material information about your public company, risking myriad legal implications. Last month, a Google employee accidentally published a scathing critique of Google + … on Google +. Best to train employees carefully about disclosure and have a clear policy in place.

5. Using the Online Community to Get Free Work: Brands call it “UGC – User Generated Content” but in creative circles it’s becoming known as “WFF” – Working For Free. The story is familiar – a brand holds an online contest allowing ordinary consumers to submit copy, designs or even produced commercials. The company picks a winner, gives prizes and uses the creative in traditional media. The dirty little secret of User Generated Content is that it’s mostly not your neighborhood plumber who wins but real creatives: often freelance or unemployed. These are professionals who should be paid for their work. Another troubling spin on this trend happens when companies put out a request for proposal for a social media campaign, gather all the most creative ideas that come out of the process and use them without hiring the particular agencies who created them. Overall it is fine to engage consumers and to reach widely for the best creative talent. But there’s a fine line between that and trying to get your creative done for free. Step on the wrong side of the line and you’ll ultimately find it difficult to source good creative, because the creative community is relatively small and very well networked.

Avoiding these 5 Deadly Sins won’t keep you completely safe in social media because you can still do something foolish completely intentionally. But it will reduce your risk, and that's the best any marketing leader can hope for.